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Managing Third-Party Risk in Anti-Bribery Compliance

The Missing Link

Forensic & Litigation Consulting

June 4, 2015

Multinational corporations operating in international markets are well aware of the risks of being caught bribing foreign officials, and most are probably confident that they have the compliance systems in place to prevent such events. Yet, companies frequently remain unaware of the magnitude of the risks posed by third parties.

Here, FTI Consulting discusses the many challenges associated with managing third-party risk, and how compliance and in-house legal teams can mitigate this risk effectively at their organisations.

A December 2014 OECD analysis* of 427 instances of bribery of public officials since 1999 found that intermediaries were involved in three out of four cases. In 41% of these cases, the intermediaries were local sales and marketing agents, distributors and brokers. Another 35% consisted of corporate vehicles, including subsidiary companies, local consulting firms, companies in offshore financial centres or tax havens, or companies established under the beneficial ownership of the public official who received the bribes.

Companies remain justifiably wary of infringing existing regulatory regimes such as the U.S. Foreign Corrupt Practice Act (FCPA), the U.K. Bribery Act (UKBA) and other global anti-corruption laws, but the evidence suggests that the role of intermediaries remains a key blind spot for many, and one that potentially leaves companies open to criminal or civil charges. Having the resources to identify potential risks associated with intermediaries is crucial to avoid this outcome.

So why are third parties most likely to be involved in bribery cases and how can multinationals avoid this danger?